EXHIBIT 10.89
DEBT CONVERSION
AND
MUTUAL SETTLEMENT AND RELEASE AGREEMENT
THIS DEBT CONVERSION AND MUTUAL SETTLEMENT AND RELEASE AGREEMENT
("Conversion Agreement") is entered into at San Diego, California, effective as
of May 3, 1999 ("Effective Date"), between Microelectronic Packaging, Inc.
("MPI"), on behalf of itself and its predecessors, successors, former and
current subsidiaries, affiliates, shareholders, directors, officers, agents,
attorneys, representatives, insurers, employees and assigns (collectively with
MPI the "MPI Group"); and Samsung Corning Co., Ltd. ("Samsung Corning") and
their respective predecessors, successors, former and current subsidiaries,
affiliates, shareholders, directors, officers, agents, attorneys,
representatives, insurers, employees and assigns (collectively with Samsung
Corning the "Investor Group").
WITNESSETH:
WHEREAS, pursuant to the Supplemental Deed by and between
Microelectronic Packaging (S) Pte. Ltd. ("MPS") and the Development Bank of
Singapore Limited ("DBS") (the "Loan Agreement"), DBS loaned One Million US
Dollars (US $1,000,000) to MPS, a subsidiary of MPI currently in liquidation,
which Loan Agreement calls for certain payments and interest amounts which were
thereafter due and payable periodically;
WHEREAS, MPI and Samsung Corning entered into a Guarantee and
Indemnity with DBS in connection with the Loan Agreement (the "Guarantee"),
pursuant to which MPI and Samsung Corning agreed to guaranty the obligations of
MPS under the Loan Agreement;
WHEREAS, in an effort to restructure and settle all of MPI's
obligations under the Guarantee, MPI and Samsung Corning entered into a
Restructuring, Settlement and Mutual Release Agreement dated May 19, 1998,
pursuant to which MPI agreed to make certain payments to Samsung Corning, in
exchange for the agreement of Samsung Corning to reduce the amount of MPI's
obligations under the Guarantee ("Restructuring Agreement"). Contingent upon
MPI's performance of its obligations under the Restructuring Agreement, the
Restructuring Agreement provided that all obligations of MPI under the Guarantee
would be deemed settled and Samsung Corning would release MPI from any further
obligations with respect thereto.
WHEREAS, MPI is not able to comply with its payment obligations under
the Restructuring Agreement.
WHEREAS, the MPI Group with respect to the Investor Group, and the
Investor Group with respect to the MPI Group, desire to finally settle all of
their respective rights and obligations under the Loan Agreement, the Guarantee,
the Restructuring Agreement and all amendments thereto, and all other related
agreements (collectively the "Former Agreements"), terminate and release all of
their respective rights and obligations under the Former Agreements, and settle
all other disputes of any kind that may or could exist between the MPI Group and
the Investor Group with respect to the Former Agreements, all upon the terms and
conditions set forth in this Conversion Agreement.
NOW THEREFORE, in consideration of the mutual agreements contained
herein and for other good and sufficient consideration, the receipt and
sufficiency of which is hereby acknowledged, the MPI Group and the Investor
Group agree as follows:
1. Defined Terms. In addition to those terms that may be defined
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elsewhere in this Conversion Agreement, the following terms shall have the
meanings defined in this Section 1.
1.1 "Conversion Date" means the date upon which the Samsung
Corning Conversion occurs pursuant to the terms and conditions hereof.
1.2 "Performance Date" means June 30, 1999.
1.3 "Series A Preferred Stock" means the Series A Preferred
Stock of MPI, the rights, preferences privileges and restrictions of which are
set forth in the Certificate of Amendment to the Amended and Restated Articles
of Incorporation of MPI, in the form attached hereto as Exhibit "A" and
incorporated herein by reference.
1.4 "Transpac Conversion" means the conversion of indebtedness
in the amount of principal and interest owed by MPM and guaranteed by MPI in the
aggregate to Transpac Capital Pte. Ltd., Transpac Industrial Holdings Ltd.,
Regional Investment Company Ltd. and Natsteel Equity III Pte. Ltd. (the
"Transpac Entities"), accrued as of December 31, 1997 (which is the entire
amount MPI and the Transpac Entities have agreed is due and payable), into Four
Million Thirty One Thousand Eight Hundred Twenty Six (4,031,826) shares of
Series A Preferred Stock.
1.5 "DBS Bank Conversion" means the conversion of indebtedness
in the amount of principal and interest owed by MPM and MPS and guaranteed by
MPI to DBS, accrued as of December 31, 1997 (which is the entire amount MPI and
DBS have agreed is due and payable), into One Million One Hundred Fifty Four
Thousand Three Hundred Eleven (1,154,311) shares of Series A Preferred Stock.
1.6 "Motorola Conversion" means the conversion of indebtedness
in the amount of principal and interest owed by MPS and guaranteed by MPI to
Motorola, accrued as of December 31, 1997 (which is the entire amount MPI and
Motorola have agreed is due and payable), into Eight Hundred Sixty Nine Thousand
Nine Hundred Thirty Two (869,932) shares of Series A Preferred Stock.
1.7 "NS Electronics Conversion" means the conversion of
indebtedness in the amount of principal and interest owed by MPI to NS
Electronics Bangkok (1993) Ltd. ("NSEB"), accrued as of December 31, 1997 (which
is the entire amount MPI and NSEB have agreed is due and payable), into Two
Hundred Seventy One Thousand One Hundred Seventy Six (271,176) shares of Series
A Preferred Stock.
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1.8 "ORIX Leasing Conversion" means the conversion of
indebtedness in the amount of principal and interest owed by MPM and MPS and
guaranteed by MPI to ORIX Leasing Singapore Limited, accrued as of December 31,
1997 (which is the entire amount MPI and ORIX Leasing have agreed is due and
payable) into Four Hundred Seventy Three Thousand Five Hundred Eighty Four
(473,584) shares of Series A Preferred Stock.
1.9 "Samsung Corning Conversion" means the conversion of
indebtedness in the amount of principal and interest owed by MPS and guaranteed
by MPI to Samsung Corning Co., Ltd., accrued as of December 31, 1997 (which is
the entire amount MPI and Samsung Corning have agreed is due and payable) into
One Hundred Eighty Three Thousand Two Hundred Seventy Five (183,275) shares of
Series A Preferred Stock.
1.10 "STMicroelectronics Conversion" means the conversion of
indebtedness in the amount of principal and interest owed by MPS and guaranteed
by MPI to STMicroelectronics, Inc. (and/or any one or more assignees and/or
transferees of STMicroelectronics, Inc.), accrued as of December 31, 1997 (which
is the entire amount MPI and STMicroelectronics have agreed is due and payable)
Into One Million Three Hundred Twenty Two Thousand Six Hundred Forty Seven
(1,322,647) shares of Series A Preferred Stock.
1.11 "Texas Instruments Conversion" means the conversion of
indebtedness in the amount of principal and interest owed by MPS and guaranteed
by MPI to Texas Instruments Incorporated, accrued as of December 31, 1997 (which
is the entire amount MPI and Texas Instruments have agreed is due and payable)
Into One Million Fifty Six Thousand Twenty Seven (1,056,027) shares of Series A
Preferred Stock.
1.12 "Other Creditor Conversions" means collectively the DBS Bank
Conversion, the Texas Instruments Conversion, the NS Electronics Conversion, the
ORIX Leasing Conversion, the Motorola Conversion, the STMicroelectronics
Conversion and the Transpac Conversion.
1.13 "Other Creditors" means collectively DBS Bank; Texas
Instruments, Inc.; NS Electronics Bangkok Ltd.; ORIX Leasing Singapore Limited;
Motorola, Inc.; STMicroelectronics, Inc.; and the Transpac Entities.
1.14 "Insolvency Action" means the commencement of a voluntary or
involuntary case against MPI under the United States Bankruptcy Code ("Code") or
an assignment for the benefit of creditors by MPI, but shall not include any
involuntary case brought under the Code which is dismissed within sixty (60)
days of its commencement where no action is brought during such time period to
avoid any issuance of Series A Preferred Stock by MPI or the performance by MPI
of any of its other obligations pursuant to this Conversion Agreement.
2. Duration of Conversion Agreement. This Conversion Agreement shall
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remain in full force and effect until the Conversion Date, subject to the
following termination provisions:
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2.1 Prior to the Performance Date, no party shall have any right
to terminate this Conversion Agreement in any respect, and all of the terms and
conditions hereof shall remain in full force and effect as set forth herein.
2.2 As of and after the Conversion Date, even if the Conversion
Date occurs after the Performance Date, no party shall have any right to
terminate this Conversion Agreement in any respect, and all of the terms and
conditions hereof shall remain in full force and effect as set forth herein.
2.3 After the Performance Date, so long as the Conversion Date
has not occurred, Samsung Corning shall have sole discretion (but shall not be
required) to terminate this Conversion Agreement by giving a written termination
notice to MPI ("Termination Notice"). In the event Samsung Corning gives MPI a
Termination Notice after the Performance Date and prior to any occurrence of the
Conversion Date, then this Conversion Agreement shall be deemed terminated as of
the date the Termination Notice is deemed given to MPI pursuant to the
provisions of Section 10.3 hereof. In the event this Conversion Agreement is
terminated by Samsung Corning pursuant to the provisions of this Section 2.3,
then this Conversion Agreement shall be deemed completely void, and MPI and
Samsung Corning shall retain and remain subject to whatever respective rights
and obligations they may otherwise have under the Former Agreements.
2.4 Regardless of any other provision of this Section 2, if an
Insolvency Action is commenced prior to the Conversion Date, then this
Conversion Agreement and the respective rights and obligations of MPI and
Samsung Corning hereunder shall be deemed immediately terminated without notice,
and MPI and Samsung Corning shall retain and remain subject to whatever
respective rights and obligations they may have under the Former Agreements.
2.5 Except as provided otherwise in Sections 7.1 or 7.2 of this
Agreement, the Former Agreements shall remain in full force and effect at all
times after the Effective Date.
3. Conditions to Samsung Corning Conversion. The completion of the
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Samsung Corning Conversion pursuant to the terms and conditions of this
Conversion Agreement shall be subject to the performance and satisfaction of
each of the following conditions, either prior to or concurrently with the
occurrence of the Samsung Corning Conversion ("Completion Conditions"):
3.1. The completion of the Other Creditor Conversions pursuant to
agreements entered into between MPI and the Other Creditors upon terms and
conditions that are not more favorable to any of such Other Creditors than the
terms and conditions contained in this Conversion Agreement. In particular, but
without limiting the generality of the foregoing provisions of this section, the
effective price per share of the Series A Preferred Stock applicable to the
Other Creditor Conversions shall not be less than One Dollar And Two Cents
($1.02), and the terms and conditions of the settlement and release provisions
applicable to the Other Creditor
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Conversions shall not be different in any material respect from the terms and
conditions of the settlement and release provisions contained in this Conversion
Agreement.
3.2 The material terms and conditions of the Samsung Corning
Conversion and the Other Creditor Conversions shall have been approved by MPI's
Board of Directors, which approval shall be sought and obtained by MPI in
accordance with all applicable laws.
3.3 The material terms and conditions of the Samsung Corning
Conversion and the Other Creditor Conversions shall have been approved by MPI's
Shareholders, which approval shall be sought and obtained by MPI in accordance
with all applicable laws.
3.4 The Certificate of Amendment of the Amended and Restated
Articles of Incorporation of MPI, in the form attached hereto as Exhibit "A" and
incorporated herein by reference ("Certificate of Amendment"), shall have been
duly adopted by all necessary corporate action of the Board of Directors and
shareholders of MPI, and shall have been duly filed with and accepted by the
California Secretary of State, upon which filing and acceptance MPI shall be
authorized to issue the Series A Preferred Stock to Samsung Corning and the
Other Creditors as required pursuant to the Samsung Corning Conversion and the
Other Creditor Conversions.
3.5 L.H. Friend, Weinress, Frankson & Presson, Inc., an
investment banking firm who serves as financial adviser to MPI, shall have
executed and issued to MPI a written opinion, in form and substance satisfactory
to MPI in its sole discretion, concluding that the Samsung Corning Conversion
and the Other Creditor Conversions are fair to MPI's Shareholders ("Fairness
Opinion"), and a copy of such Fairness Opinion shall have been provided to
Samsung Corning.
3.6 MPI and Samsung Corning shall have performed each of their
respective obligations and conditions that this Conversion Agreement requires
them to perform on or prior to the Conversion Date.
4. Obligations of MPI for Samsung Corning Conversion. MPI shall have
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the following affirmative obligations under this Conversion Agreement until such
time as the Samsung Corning Conversion has been completed, or this Conversion
Agreement has been terminated pursuant to the provisions of Section 2 hereof:
4.1 MPI shall use its best and most diligent efforts to obtain
the agreement of each of the Other Creditors to complete the Other Creditor
Conversions pursuant to agreements entered into between MPI and the Other
Creditors upon terms and conditions that are not more favorable to such Other
Creditors than the terms and conditions contained in this Conversion Agreement.
In particular, but without limiting the generality of the foregoing provisions
of this section, MPI shall use its best and most diligent efforts to obtain the
agreement of the Other Creditors that the effective price per share of the
Series A Preferred Stock applicable to the Other Creditor Conversions shall not
be less than One Dollar And Two Cents ($1.02), and
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the terms and conditions of the settlement and release provisions applicable to
the Other Creditor Conversions shall not be different in any material respect
from the terms and conditions of the settlement and release provisions contained
in this Conversion Agreement.
4.2 MPI shall use its best and most diligent efforts to obtain
the approval of MPI's Board of Directors of the material terms and conditions of
the Samsung Corning Conversion and the Other Creditor Conversions, which
approval shall be obtained in accordance with applicable laws.
4.3 MPI shall use its best and most diligent efforts to obtain
the approval of MPI's Shareholders of the material terms and conditions of the
Samsung Corning Conversion and the Other Creditor Conversions, which approval
shall be obtained in accordance with applicable laws.
4.4 MPI shall use its best and most diligent efforts to cause
the Certificate of Amendment to be approved by MPI's Board of Directors and
shareholders, which approval shall be obtained in accordance with applicable
laws, and to cause the Certificate of Amendment to be filed with and accepted by
the California Secretary of State, upon which filing and acceptance MPI shall be
authorized to issue the Series A Preferred Stock to Samsung Corning and the
Other Creditors as required pursuant to the Samsung Corning Conversion and the
Other Creditor Conversions.
4.5 MPI shall use its best and most diligent efforts to cause
the Samsung Corning Conversion to be completed as soon as reasonably possible.
4.6 MPI shall use its best and most diligent efforts at all
times prior to the Conversion Date, to conduct its business in the usual and
ordinary course.
5. [This Section has been intentionally left blank.]
6. Completion of Conversion. At such time as all of the Completion
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Conditions have been performed and satisfied by MPI, then MPI and Samsung
Corning shall complete the Samsung Corning Conversion concurrently with the
completion by MPI and the Other Creditors of the Other Creditor Conversions, by
concurrently taking the following actions:
6.1 Actions By MPI.
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(a) MPI shall duly execute and deliver to Samsung Corning a
counterpart copy of the form of Registration Rights Agreement attached to this
Conversion Agreement as Exhibit "B" and incorporated herein by reference
("Registration Agreement").
(b) MPI's Chief Executive Officer shall duly execute and
deliver to Samsung Corning the form of Certificate of Chief Executive Officer
attached to this Conversion Agreement as Exhibit "E" and incorporated herein by
reference ("Certificate of CEO"), certifying the following matters:
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(i) Any approvals of MPI's shareholders and directors
that may be required under any applicable law, in connection with the
transactions contemplated by this Conversion Agreement, have been duly obtained
and are in full force and effect as of the Conversion Date.
(ii) All of the representations and warranties of MPI
set forth in this Conversion Agreement, the Ancillary Agreements (as defined
below) or in any other document delivered to Samsung Corning in connection
herewith, are true, accurate, complete, and not misleading in any material
respect as of the Conversion Date.
(iii) MPI has performed all of the duties and
obligations required to be performed by MPI on or prior to the Conversion Date,
pursuant to the provisions of this Conversion Agreement, the Ancillary
Agreements (as defined below) or in any other document delivered to Samsung
Corning in connection herewith.
(c) MPI shall cause its legal counsel to duly execute and
deliver to Samsung Corning the form of legal opinion letter attached to his
Conversion Agreement as Exhibit "F" and incorporated herein by reference ("Legal
Opinion").
(d) MPI shall deliver to Samsung Corning copies of
certificates of good standing for MPI issued by the California Secretary and
State and the California Franchise Tax Board, dated not more than five (5) days
prior to the Conversion Date.
(e) MPI shall deliver to Samsung Corning the stock
certificate representing One Hundred Eighty Three Thousand Two Hundred Seventy
Five (183,275) shares of Series A Preferred Stock issued by MPI to Samsung
Corning.
(f) MPI shall deliver to Samsung Corning and its legal
counsel copies of the following documents:
(i) A copy of the Certificate of Amendment and Bylaws
of MPI (as amended through the Conversion Date), certified by the Secretary of
MPI as true and correct copies thereof as of the Conversion Date.
(ii) A copy of the resolutions of the Board of
Directors and shareholders of MPI evidencing the amendment to MPI's Amended and
Restated Articles of Incorporation providing for the authorization of the Series
A Preferred Stock and the approval of this Agreement and the other agreements,
documents, and matters contemplated hereby, certified by the Secretary of MPI to
be true, complete and correct.
6.2 Actions By Samsung Corning.
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(a) Samsung Corning shall duly execute and deliver to MPI a
counterpart copy of the Registration Agreement.
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6.3 Effect of Conversion. Upon the occurrence of the Conversion
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Date, (a) the debts owed by MPI to Samsung Corning shall be deemed to have been
converted, respectively, into the number of shares of MPI's Series A Preferred
Stock issued to Samsung Corning, as set forth in Section 6.1; and (b) as of and
after the Conversion Date, MPI shall not owe any debt of any kind to Samsung
Corning, as set forth in more detail pursuant to Section 7 of this Conversion
Agreement.
7. Settlement and Mutual Release. If and only if the Conversion is
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completed pursuant to the terms and conditions of this Conversion Agreement,
then in that case only, effective as of the Conversion Date, MPI and Samsung
Corning agree that the terms and conditions of this Section 7 shall be in effect
with respect to the Former Agreements and all of the respective rights and
obligations of MPI and Samsung Corning pursuant to the Former Agreements and all
other related agreements:
7.1 The Former Agreements shall be deemed to have been
voluntarily terminated pursuant to the mutual agreement of MPI and Samsung
Corning, without any remaining liability to either the MPI Group or the Investor
Group. Without limiting the generality of the foregoing provisions of this
section, MPI and Samsung Corning agree that MPI shall no longer have any
obligations of any kind under the Former Agreements to pay any amount to Samsung
Corning, and Samsung Corning shall no longer have any rights of any kind under
the Former Agreements to convert any amounts owed under the Former Agreements
into, or to otherwise obtain ownership of, shares of MPI's stock of any class or
series.
7.2 The MPI Group with respect to the Investor Group, and the
Investor Group with respect to the MPI Group, shall be deemed to have forever
released and discharged each other from and against any and all claims, damages
and causes of action they may have against each other with respect to and in
connection with the Former Agreements and any matter arising out of the terms
and conditions thereof, including without limitation, any breach of any
representation or warranty or noncompliance or nonfulfillment of any covenant or
agreement contained in or arising out of the Former Agreements; provided that
such release and discharge shall not extend to any claims, damages and causes of
action any member of the Investor Group may have against any member of the MPI
Group (or any member of the MPI Group may have against any member of the
Investor Group) for fraud or willful misconduct with respect to any of the
Former Agreements or any of the transactions contemplated by this Agreement.
However, the foregoing release provisions of this section do not apply to this
Conversion Agreement, or the Certificate of Amendment, the Registration
Agreement, (collectively the "Ancillary Agreements"), or any of the respective
rights and obligations of MPI and/or Samsung Corning pursuant to the terms and
conditions of this Conversion Agreement or the Ancillary Agreements.
8. Representations, Warranties and Agreements of MPI. In addition to
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any representations and warranties MPI may make to Samsung Corning elsewhere in
this Conversion Agreement, the Ancillary Agreements or in any other document
delivered to Samsung Corning in connection herewith, MPI represents and warrants
to Samsung Corning that the statements contained in this Section 8 are true,
accurate, complete, and not misleading in any material respect, and also shall
be so as of the Conversion Date.
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8.1 Organization and Good Standing, and Other Status. MPI is a
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corporation, legally and validly incorporated, organized and existing under the
laws of the State of California. MPI is in good standing as certified by both
the California Secretary of State and the California Franchise Tax Board.
8.2 Authority to Conduct Business. MPI possesses full corporate
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power and lawful authority to own, lease and operate its assets, and to carry on
its business as presently conducted. MPI is duly and legally qualified to do
business and is in good standing in each country, state, county, city or other
jurisdiction in which the failure to so qualify would have a material adverse
impact on MPI's business.
8.3 Authority Regarding this Agreement.
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8.3.1 MPI has the complete and unrestricted right, power,
authority and capacity to (a) execute and deliver this Conversion Agreement, the
Ancillary Agreements and every other document executed and delivered by MPI to
Samsung Corning in connection therewith (collectively the "Transaction
Documents"); and (b) carry out and perform each of MPI's obligations pursuant to
the Transaction Documents.
8.3.2 As of the Conversion Date, no further corporate or
shareholder authority, approvals, actions or proceedings will be necessary on
the part of MPI to authorize the Transaction Documents or any of the
transactions contemplated thereby.
8.3.3 This Conversion Agreement has been, and, as of the
Conversion Date all of the other Transaction Documents will have been, duly and
validly executed and delivered by MPI, and when so executed and delivered, will
constitute legal, valid and binding obligations of MPI, enforceable in
accordance with their terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors' rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies, and (iii) to the extent the indemnification provisions
contained in the Registration Agreement may be limited by applicable federal or
state securities laws.
8.3.4 The execution and delivery of this Conversion
Agreement does not, the execution and delivery of the other Transaction
Documents will not, and the consummation of the transactions contemplated
thereby will not, violate any provision of MPI's Amended and Restated Articles
of Incorporation or Bylaws (as amended), or any mortgage, lien, lease,
agreement, instrument, order, judgment or decree to which MPI is a party or by
which MPI or any of its assets is bound.
8.4 Valid Issuance of Preferred and Common Stock. The Series A
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Preferred Stock, when issued and delivered in accordance with the terms of this
Conversion Agreement, will be duly and validly issued, fully paid, and
nonassessable, and will be free of restrictions on transfer other than those
stated in this Conversion Agreement and/or that may arise under applicable state
and federal securities laws. The common stock of MPI issuable upon
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conversion of the Series A Preferred Stock has been duly and validly reserved
for issuance and, upon issuance in accordance with the terms of the Certificate
of Amendment, will be duly and validly issued, fully paid, and nonassessable,
and will be free of restrictions on transfer other than those stated in this
Conversion Agreement and/or that may arise under applicable state and federal
securities laws.
8.5 Consents. No consent, approval, order or authorization of,
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or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority or any third party on the part of
MPI is required in connection with the consummation of the transactions
contemplated by this Conversion Agreement, except (i) the filing of the
Certificate of Amendment with the California Secretary of State; (ii) the filing
required pursuant to Section 25102(f) of the California Corporate Securities Law
of 1968, as amended, and the rules thereunder, which filing will be effected
within fifteen (15) days after the issuance of the Series A Preferred Stock
pursuant hereto.
8.6 Offering. Subject in part to the truth and accuracy of the
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representations of Samsung Corning set forth in Section 9 of this Agreement, the
issuance of the Series A Preferred Stock as contemplated by the Transaction
Documents is exempt from the registration and qualification requirements of any
applicable state and federal securities laws, and neither MPI nor any authorized
agent acting on its behalf will take any action hereafter that would cause the
loss of such exemption.
8.7 Disclosure. MPI has fully provided Samsung Corning with all
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information Samsung Corning has requested for deciding whether to enter into the
transactions contemplated by the Transaction Documents, including without
limitation, the acquisition of the Series A Preferred Stock.
8.8 Brokers. MPI has not taken any actions in connection with
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the negotiations relating to the Transaction Documents or the transactions
contemplated thereby that could give rise to an obligation on the part of
Samsung Corning to pay any brokerage or finder's fee, commission or similar
compensation to any party in connection therewith.
8.9 Litigation: Except as set forth in this Section 8.9, there
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is no action, suit, proceeding, claim, arbitration or investigation ("Action")
pending (or, to the best of MPI's knowledge, currently threatened) against MPI,
its activities, properties or assets or, to the best of MPI's knowledge, against
any officer, director or employee of MPI in connection with such officer's,
director's or employee's relationship with, or actions taken on behalf of, MPI.
To the best of MPI's knowledge, there is no factual or legal basis for any such
Action that might result, individually or in the aggregate, in any material
adverse change in the business, properties, assets, financial condition, affairs
or prospects of MPI. MPI is not a party to or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality, and there is no Action by MPI currently pending or which MPI
intends to initiate (other than claims for monetary damages asserted by MPI
against International Business Machines Corporation ("IBM") under the Purchase
Option Agreement dated August 4, 1994, between IBM and MPI and the Multilayer
Technology Transfer and Licensing Agreement dated August 4, 1994, between IBM
and MPI). MPI is a defendant in a lawsuit filed on December 18,
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1998, against MPI and Schlumberger Technologies, Inc., in the United States
District Court for the Southern District of New York ("Lawsuit"). The plaintiffs
in the Lawsuit are Gary Stein and Lewis Solomon. Both Mr. Solomon and Mr. Stein
are former directors of MPI. The Lawsuit alleges the following claims against
MPI:
(a) Failure to pay an amount alleged to be not less than
Thirty Thousand Dollars ($30,000) allegedly owed to Lewis Solomon as
compensation for services performed by him as the former Chairman of MPI's Board
of Directors;
(b) Failure to pay an amount alleged to be not less than
Seventy One Thousand Two Hundred Fifty Dollars ($71,250) allegedly owed in the
aggregate to Mr. Stein and Mr. Solomon as compensation under a consulting
agreement;
(c) Wrongful termination of a consulting agreement, for
which wrongful termination Mr. Stein and Mr. Solomon allege damages in the
aggregate of not less than Five Hundred Thousand Dollars ($500,000);
(d) Tortious interference with Mr. Stein's and Mr.
Solomon's prospective economic relationships and business advantages as
consultants and directors of public corporations, presumably arising out of
MPI's termination of their consulting agreement, for which Mr. Stein and Mr.
Solomon allege damages in the aggregate of not less than Five Million Dollars
($5,000,000);
(e) Costs and expenses incurred in the Lawsuit in an
unspecified amount.
MPI believes the claims made by Mr. Stein and Mr. Solomon against
MPI in the lawsuit are completely without merit. MPI is actively and vigorously
defending the lawsuit, and has made substantial counterclaims against Mr. Stein
and Mr. Solomon.
8.10 Capitalization. The capitalization of MPI immediately prior
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to the Conversion Date will consist of the following:
(a) Preferred Stock. A total of Nine Million Three Hundred
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Sixty Two Thousand Seven Hundred Seventy Eight (9,362,778) authorized shares of
preferred stock, no par value per share, consisting of Nine Million Three
Hundred Sixty Two Thousand Seven Hundred Seventy Eight (9,362,778) shares
designated as Series A Preferred Stock, none of which will be issued and
outstanding. Upon the Samsung Corning Conversion and Other Creditor Conversions,
the rights, preferences and privileges of the Series A Preferred Stock will be
as stated in MPI's Amended and Restated Articles of Incorporation, as amended by
the Certificate of Amendment, and as provided by law.
(b) Common Stock. A total of Fifty Million (50,000,000)
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authorized shares of common stock, no par value per share (the "Common Stock"),
of which not more than Eleven Million (11,000,000) shares will be issued and
outstanding.
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(c) Options, Warrants, Reserved Shares. Except for: (i) the
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conversion privileges of the Series A Preferred Stock; (ii) Four Million Six
Hundred Ninety Thousand Six Hundred Thirty Two (4,690,632) shares of Common
Stock reserved for issuance under MPI's 1993 Stock Option Plan under which
options to purchase Two Million Four Hundred Twenty Four Thousand Five Hundred
(2,424,500) shares are outstanding; and (iii) warrants to purchase Seven Hundred
Thousand (700,000) shares of Common Stock; there is no outstanding, option,
warrant, right (including conversion or preemptive rights) or agreement for the
purchase or acquisition from MPI of any shares of its capital stock or any
securities convertible into or ultimately exchangeable or exercisable for any
shares of MPI's capital stock. Apart from the exceptions noted in this Section
8.10, and except for rights of first refusal held by MPI to purchase shares of
its stock issued under MPI's 1993 Stock Option Plan, no shares of MPI's
outstanding capital stock , or stock issuable upon exercise or exchange of any
outstanding options, warrants or rights, or other stock issuable by MPI, are
subject to any preemptive rights, rights of first refusal or other rights to
purchase such stock (whether in favor of MPI or any other person), pursuant to
any agreement or commitment of MPI.
9. Representations, Warranties and Agreements of Samsung Corning.
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In addition to any representations and warranties Samsung Corning may make to
MPI elsewhere in this Conversion Agreement, the Ancillary Agreements or in any
other document delivered to MPI in connection herewith Samsung Corning,
represents and warrants to MPI that the statements contained in this Section 9
are true, accurate, complete, and not misleading in any material respect, and
also shall be so as of the Conversion Date.
9.1 Authority Regarding this Agreement.
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9.1.1 Samsung Corning has the complete and unrestricted
right, power, authority and capacity to (a) execute and deliver each Transaction
Document to which it is a party; and (b) carry out and perform each of its
obligations pursuant to such Transaction Documents.
9.1.2 As of the Conversion Date, no further corporate or
shareholder authority, approvals, actions or proceedings will be necessary on
the part of Samsung Corning to authorize the Transaction Documents or any of the
transactions contemplated thereby.
9.1.3 This Conversion Agreement has been, and, as of the
Conversion Date all of the other Transaction Documents will have been, duly and
validly executed and delivered by Samsung Corning, and when so executed and
delivered, will constitute legal, valid and binding obligations of Samsung
Corning, enforceable in accordance with their terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies, and (iii) to the extent the
indemnification provisions contained in the Registration Agreement may be
limited by applicable federal or state securities laws.
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9.2 Purchase Entirely For Own Account. MPI is entering into the
---------------------------------
Transaction Documents in reliance on the representation made by Samsung Corning,
which representation is confirmed by Samsung Corning's execution of this
Conversion Agreement, and Samsung Corning hereby confirms, that the Series A
Preferred Stock to be received by Samsung Corning, and MPI's common stock
issuable upon conversion thereof (collectively the "Securities") will be
acquired for investment and not with a view to the resale or distribution of any
part thereof, and that Samsung Corning has no present intention of selling,
granting any participation in, or otherwise distributing the same. By executing
this Conversion Agreement, Samsung Corning further represents that Samsung
Corning does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participations to such person or to any
third person, with respect to any of the Securities.
9.3 Disclosure of Information. Samsung Corning believes it has
-------------------------
received all the information it considers necessary or appropriate for deciding
whether to acquire the Securities. Samsung Corning further represents that it
has had an opportunity to ask questions and receive answers from MPI regarding
the terms and conditions of the Transaction Documents and the business,
properties, prospects and financial condition of MPI.
9.4 Investment Experience. Samsung Corning acknowledges that it
---------------------
is able to fend for itself, can bear the economic risk of its investment, and
has such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Securities.
Samsung Corning has carefully evaluated its financial resources and investment
position and the risks associated with an investment in the Securities, and
acknowledges that it is able to bear the economic risks of this investment.
Samsung Corning further acknowledges that its financial condition is such that
it is not under any present necessity or constraint to dispose of the securities
to satisfy any existing or contemplated debt or undertaking. Samsung Corning
also represents it has not been organized for the purpose of acquiring the
Securities.
9.5 Restricted Securities. Samsung Corning understands that the
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Securities are characterized as "restricted securities" under the federal
securities laws of the United States, inasmuch as they are being acquired from
MPI in a transaction not involving a public offering, and that under such laws
and applicable regulations the Securities may be resold without registration
only in certain limited circumstances. In this connection, Samsung Corning
represents that it is familiar with Securities and Exchange Commission ("SEC")
Rule 144, as presently in effect, and understands the resale limitations imposed
thereby and generally by the federal securities laws of the United States.
Samsung Corning further understands that the Securities have not been registered
under the Securities Act of 1933, as amended ("33 Act") or qualified or
otherwise registered under the applicable securities laws of any state or other
jurisdiction, that any disposition of the Securities by Samsung Corning is
subject to restrictions imposed by federal and state laws, that the stock
certificates representing the Securities will bear a restrictive legend stating
that Samsung Corning cannot dispose of the Securities absent such registration
and qualification, except pursuant to any available exemption from such
registration and qualification.
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9.6 Further Restrictions on Transfer. Without in any way
--------------------------------
limiting the representations set forth above in this Section 9, Samsung Corning
further agrees not to make any disposition of all or any portion of the
Securities unless and until the transferee has agreed in writing for the benefit
of MPI to be bound by the provisions of Sections 9.3 through 9.7 hereof, and the
provisions of the Registration Agreement, to the extent such sections and such
agreement are then applicable, and:
(a) There is then in effect a Registration Statement under
the 33 Act covering such proposed disposition and such disposition is made in
accordance with such Registration Statement; or
(b) Samsung Corning shall have notified MPI of the proposed
disposition and shall have furnished MPI with a detailed statement of the
circumstances surrounding the proposed disposition, and if reasonably requested
by MPI, Samsung Corning shall have furnished MPI with an opinion of counsel,
reasonably satisfactory to MPI, that such disposition will not require
registration of the Securities in question under the 33 Act.
Notwithstanding the provisions of paragraphs (a) and (b) above,
no such registration statement or opinion of counsel shall be required: (i) for
any transfer of any Securities in compliance with SEC Rule 144 or Rule 144A; or
(ii) for any transfer of any Securities by a holder thereof that is a
partnership or a corporation to: (1) a partner of such partnership or a
shareholder of such corporation; (2) a retired partner of such partnership who
retires after the date hereof; or (3) the estate of any such partner or
shareholder; provided, that in each of the foregoing cases the transferee agrees
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in writing to be subject to the terms of this Section 9 to the same extent as if
the transferee were an original purchaser of Securities hereunder.
9.7 Restrictive Legend. Each certificate representing the
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Series A Preferred Stock or any other securities issued in respect of the Series
A Preferred Stock or upon the conversion thereof, shall be stamped or otherwise
imprinted with a legend in the following form, in addition to any legend
required pursuant to applicable state securities laws:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (AS AMENDED), NOR QUALIFIED OR OTHERWISE REGISTERED
UNDER THE APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THESE
SECURITIES HAVE BEEN ACQUIRED ONLY FOR INVESTMENT AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED, OR OTHERWISE DISPOSED OF OR HYPOTHECATED (a) IN THE
ABSENCE OF BOTH (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OF 1933 (AS AMENDED), AND (ii) AN EFFECTIVE QUALIFICATION OR REGISTRATION UNDER
THE APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, OR (b) UNLESS
AN EXEMPTION FROM ANY SUCH REGISTRATIONS OR QUALIFICATIONS IS AVAILABLE AND THE
ISSUER HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT
SUCH REGISTRATIONS OR QUALIFICATIONS ARE NOT REQUIRED.
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9.8 Foreign Persons. If Samsung Corning is not a United States
---------------
person, Samsung Corning hereby represents that (a) it has satisfied itself as to
the full observance of the laws of its own jurisdiction in connection with any
acquisition of the Securities, including without limitation (i) the legal
requirements within such jurisdiction applicable to the acquisition of the
Securities; (ii) any foreign exchange restrictions applicable to such
acquisition; (iii) any governmental or other consents that may need to be
obtained; and (iv) the income tax and other tax consequences, if any, that may
be relevant to the acquisition, holding, sale or transfer of the Securities; and
(b) Samsung Corning's acquisition and continued ownership of the Securities will
not violate any applicable securities or other laws of such member's
jurisdiction.
9.9 Brokers or Finders. Samsung Corning has not taken any
------------------
actions in connection with the negotiations relating to this Conversion
Agreement or the transactions contemplated hereby that could give rise to an
obligation on the part of MPI to pay any brokerage or finder's fee, commission
or similar compensation to any party in connection therewith.
10. Miscellaneous Provisions.
------------------------
10.1 Exhibits. All exhibits described in this Conversion
--------
Agreement are incorporated by reference as if fully set forth herein, and
constitute a material part of this Conversion Agreement, whether or not such
exhibits are attached hereto.
10.2 Governing Law. This Conversion Agreement shall in all
-------------
respects be construed, interpreted and enforced in accordance with and governed
by the laws of the State of California, United States of America. Any legal
action between the parties regarding this Conversion Agreement shall be brought
in, and the parties hereby consent to the jurisdiction of and venue in, either
(a) the federal and state courts located in the County of San Diego, State of
California, United States of America; or (b) the courts located in the country
of Singapore.
10.3 Notices. Any notice, demand or other communication required
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or permitted under this Conversion Agreement shall be deemed given and delivered
when in writing and (a) personally served upon the receiving party, or (b) upon
the third (3rd) calendar day after mailing to the receiving party by either (i)
United States registered or certified mail, postage prepaid, or (ii) FedEx or
other comparable overnight delivery service, delivery charges prepaid, and
addressed as follows:
To MPI: Microelectronic Packaging, Inc.
9577 Chesapeake Drive
San Diego, CA 92123
Attn: Chief Executive Officer
To Samsung Corning: Samsung Corning Co., Ltd.
472 Shin-dong
Paldal-gu Suwon Si
Kyunggi-do
Korea 442-390
15
Attn: Jong-Won Chang, Legal Team
Any party may change the address specified in this section by giving the other
party notice of such new address in the manner set forth herein.
10.4 Severability. In the event that any provision of this
------------
Conversion Agreement becomes or is declared by a court of competent jurisdiction
to be illegal, unenforceable or invalid, then this Conversion Agreement shall
continue in full force and effect without said provision. If this Conversion
Agreement continues in full force and effect as provided above, the parties
shall replace the invalid provision with a valid provision which corresponds as
far as possible to the spirit and purpose of the invalid provision.
10.5 Counterparts. This Conversion Agreement may be executed
------------
in any number of counterparts, each of which may be executed by less than all of
the parties hereto, each of which shall be enforceable against the parties
actually executing such counterparts, and all of which together shall constitute
one document.
10.6 Entire Agreement. This Conversion Agreement, the
----------------
Ancillary Agreements, and the documents and agreements contemplated herein and
therein, constitute the entire agreement between the parties with respect to the
subject matter hereof, and supersede all prior oral or written agreements,
representations or warranties between the parties other than those set forth
herein or herein provided for.
10.7 Successors and Assigns. Except as specifically
----------------------
permitted pursuant to the terms and conditions hereof, no party shall be
permitted to assign their respective rights or obligations under this Conversion
Agreement without the prior written consent of the other parties. The provisions
hereof shall inure to the benefit of, and be binding upon, the permitted
successors and assigns, heirs, executors, and administrators of the parties
hereto.
10.8 Amendment and Waiver. No modification or waiver of any
--------------------
provision of this Conversion Agreement shall be binding upon the party against
whom it is sought to be enforced, unless specifically set forth in writing
signed by an authorized representative of that party. A waiver by any party of
any of the terms or conditions of this Conversion Agreement in any one instance
shall not be deemed or construed to be a waiver of such terms or conditions for
the future, or of any subsequent breach thereof. The failure by any party hereto
at any time to enforce any of the provisions of this Conversion Agreement, or to
require at any time performance of any of the provisions hereof, shall in no way
to be construed to be a waiver of such provisions or to affect either the
validity of this Conversion Agreement or the right of any party to thereafter
enforce each and every provision of this Conversion Agreement.
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10.9 Survivability. All of the representations, warranties,
-------------
agreements and obligations of the parties pursuant to this Conversion Agreement
shall survive any issuance of the Shares and/or the Option Shares by the Company
to the Buyers.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Conversion Agreement as of the date first above written.
MICROELECTRONIC PACKAGING, INC. SAMSUNG CORNING CO., LTD.
By: /s/ Denis J. Trafecanty By: /s/ Se June Oh
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Signature Signature
By: Denis J. Trafecanty By: Se June Oh
---------------------------------- ------------------------------
Print Print
Title: Senior Vice President and CFO Title: Director of Management &
------------------------------- ---------------------------
Planning Team
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